Gene Logic to purchase TherImmune Research

$52 million cash-stock deal to widen customer base

February 26, 2003|By Julie Bell | Julie Bell,SUN STAFF

Gene Logic Inc., a marketer of genetic information used by drug researchers, said yesterday that it has agreed to acquire TherImmune Research Corp. for $52 million in cash and stock.

The Gaithersburg-based company said the acquisition will broaden its customer base that now consists primarily of large pharmaceutical companies.

Privately held TherImmune, also of Gaithersburg, handles drug discovery experiments, animal studies and early-stage clinical trials under contracts with small and medium-size biotechnology companies.

Gene Logic hopes those customers will benefit from its databases that help predict the effectiveness and side effects of drugs in development.

"TherImmune already is providing ... services to what is our target market," Gene Logic Chief Executive Officer Mark D. Gessler said yesterday during a conference call with analysts and investors. "We will be well-positioned to earn new business."

TherImmune, founded in 1998 and profitable for the last two years, has 215 employees and had revenue of $27 million last year, up 50 percent from the previous year. Gene Logic, which has about 285 employees, lost $24 million, or 89 cents a share, on revenue of $54.8 million in 2002.The acquisition, expected to close in the second quarter, may help Gene Logic address a sluggish flow of new customers, said Robert W. Baird & Co. analyst Aaron Geist. It has generally taken the company nine to 12 months to sign up new pharmaceutical subscribers to its databases of information, which Geist said have run from $25,000 to $1 million a year.

"This is an opportunity to knock on a lot of doors of new pharmaceutical companies" that haven't traditionally purchased its database products, Geist said. Gene Logic also may be able to sell TherImmune services to current customers.

Gene Logic, one of the only companies left concentrating solely on providing genetic information, said the acquisition would get it to profitability more quickly. Management declined to predict when that might be.

The terms require Gene Logic to pay about $31 million in cash and issue new shares with a value of $21 million, subject to adjustment. The company said TherImmune's entire senior management team had agreed to stay on.

TherImmune CEO Stephen J. Trevisan also will take a seat on Gene Logic's board of directors.

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